**5. Conclusion, research limitation, and further research**

Islamic banking in Indonesia is a new institutional approach in promoting economic development. Although its shares are small, it has been growing rapidly and now becomes a new national policy in spreading growth and prosperity. Islamic banks, technically, have two sides, funding and financing, which are operationally connected and integrated. Given this condition, the potential risks are quite large to occur and might become systematic risk if not well managed. By using the VECM approach, this study investigates what is the main source of risk and how embedded risks in Islamic banks interacted with each other. After conducting sequential steps of analysis for financing, liquidity, and operational risks on Islamic banks in Indonesia since 2010–2018, the findings suggest that (1) liquidity risk is manageable and sound given that Islamic banks can absorb transmitted risk, particularly originated from financing and operational problems, indicated by no liquidity problems exist; (2) financing risk is considered as the strong source triggering operational risk in Islamic banks, and (3) operational risk matters for Islamic banks as it is quite sensitive with the problems from financing side.

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Based on the findings, there are some research limitations concerning as follows: (1) the research does not analyze the policy rule concerning the tolerated level of risks, specific to Islamic banks in order to implement intervention for risk mitigation; (2) the research does not investigate the tolerated level of shocks, particularly from macroeconomic indicators in order to mitigate potential systemic risk due to adverse exogenous shocks; and (3) the research does not develop a comprehensive heat map as a surveillance tool to monitor the growing risks given the dynamic and interrelated aspects in Islamic banking operations.

Given the above findings and limitations, the research suggests some further potential and important investigation related to risk analyses in Islamic banks, including (1) developing a surveillance tool through a credible composite index to monitor regularly and intensively the growing risks in Islamic banks; (2) building the optimal thresholds of risks and shocks in order to ensure the vulnerability is manageable and resilience is maintained; and (3) building an early-warning system for risk mitigation as a risk management technique specific for Islamic banks.
